Why You May Want to File Your 2020 Tax Return Early
The IRS announced it is opening the 2020 individual income tax return filing season on February 12. (This is later than in past years because of a new law that was enacted late in December.) If you normally don’t file until closer to the April 15 deadline (or you file for an extension), you may want to consider filing earlier this year. Why? You can potentially protect yourself from tax identity theft — and there may be other benefits, too.
How is a person’s tax identity stolen?
In a tax identity theft scheme, a thief uses an individual’s personal information to file a fraudulent tax return early in the filing season and claim a bogus refund.
The real taxpayer discovers the fraud when he or she files a return and is told by the IRS that the return is being rejected because one with the same Social Security number has already been filed for the tax year. Tax identity theft can be a hassle to straighten out and significantly delay a refund.
Filing early may be your best defense: If you file first, it will be the tax return filed by a potential thief that will be rejected — not yours.
To help prevent identity theft, all taxpayers can register for the Identity Protection PIN Opt-In Program. The six-digit number assigned to the taxpayer helps prevent the filing of fraudulent federal tax returns. Learn more about the Identity Protection PIN Opt-In Program here.
When will I receive my W-2s and 1099s?
You need all of your W-2s and 1099s to file your tax return. February 1 is the deadline for employers to issue 2020 Form W-2 to employees and, generally, for businesses to issue Form 1099s to recipients of any 2020 interest, dividend or reportable miscellaneous income payments (including those made to independent contractors).
If you haven’t received a W-2 or 1099 by February 1, first contact the entity that should have issued it. If that doesn’t work, you can contact the IRS for help.
Other benefits to filing early
In addition to protecting yourself from tax identity theft, another benefit of early filing is that you’ll get your refund faster. The IRS expects most refunds to be issued within 21 days. The time is typically shorter if you file electronically and receive a refund by direct deposit into a bank account.
Direct deposit also avoids the chance that a refund check could be lost, stolen, returned to the IRS as undeliverable or caught in mail delays.
If you haven’t received an Economic Impact Payment (EIP), or you didn’t receive the full amount due, filing early will help you to receive the amount sooner. Amounts due that weren’t sent to eligible taxpayers can be claimed on your 2020 return.
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